The convention also voted 403-50 to install the experienced
Franz Muentefering as the new party leader - completing a shake-up
at the top as the struggling party focuses on next September's
parliamentary vote. There were 22 abstentions.

The Social Democrats are keen to end an uneasy "grand
coalition" under Merkel next year, but polls show them facing a
difficult battle to win back the chancellery.

Steinmeier - who is Merkel's vice chancellor - suggested the
global financial crisis would create a favorable political climate
for his party. It has championed a national minimum wage and called
for curbs on perceived excesses in managers' pay.

"The rule of radical market ideology that began with Margaret
Thatcher and Ronald Reagan has ended with a loud bang," Steinmeier
told delegates. "The world is holding its breath, but also
breathing a sigh of relief."

"This new time that is dawning now must become our time - the
time of social democracy," he said. "I want to work as chancellor
in a year's time so that the direction is right in this country."

He called for a "protective shield for jobs in Germany" to
follow efforts to prop up the financial sector, and urged companies
not to shed skilled workers.

Steinmeier, 52, emerged as the Social Democrats' challenger to
Merkel after months of infighting over the party's direction
undermined the authority of then-leader Kurt Beck, who quit
abruptly last month.

The party has struggled to cope with both the popularity of
Merkel and the challenge from the new Left Party, which combines
reform-weary former Social Democrats with ex-communists.

Recent polls have shown the Social Democrats trailing Merkel's
Christian Democrats by about 10 points and Germans preferring
Merkel to Steinmeier as chancellor, although the foreign minister
is rated one of the country's most popular politicians.

Steinmeier was former Chancellor Gerhard Schroeder's chief of
staff. He has never held elected office and is untested as a
campaigner, but he touted his experience on Saturday.

"I have seen the chancellery from inside," he said. "I know
what awaits me next year and after election day."

Muentefering, 68, comes with a strong record as an election
campaigner and long experience as a party insider. He was party
leader from 2004 to 2005, and was Merkel's vice chancellor from
2005 until last year.

Muentefering, like Steinmeier, is widely viewed as being on the
party's right wing and is associated with Schroeder's unpopular
drive to reform the welfare state. Still, he has tacked left in the
past, once attacking financial investors who "descend on companies
like swarms of locusts."

Steinmeier called for unity.

"Hope and confidence are back," he said. "When it matters, we
are one party - and it must stay that way."